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Economic Systems

This presentation will provide students with basic information on economic systems and how they function.

Douglas Ramage

on 18 November 2016

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Transcript of Economic Systems

Economic Systems Capitalism Definition: a free market system driven by supply & demand Consumers: people who purchase and consume goods & services
Producers: people/companies who provide goods & services Land: natural resources used to produce goods
Labor: human effort used to make goods, physical & mental
Capital: money invested in the business, machinery, factories, etc
Entrepreneurship: person(s) who organize the factors & take the risk in hopes of reward (profit) Labor Capital Factors of Production Land Entrepreneur In Capitalism, the factors of production are controlled by the individual Characteristics of a Capitalist System Private Property
the individual is free to own their own......
the individual is free to sell..... SElf-Interest
"Greed is good"
all of society will benefit when each person does what is best for themself Competition
essential in a free market
competition keeps prices low & quality high
consumers benefit from competition Limited Role of Government
Laissez-faire: government "hands-off" the economy
too much government regulation disrupts the market
"invisible hand", the market will solve its own problems VS Freedom of Choice
Individuals are free to produce & consume whatever they want
can choose where to be employed & whom to employ
essentiall component of a free market Goods
physical objects that can be purchased Services
actions or activities done for others for a fee Adam Smith 1776: "Wealth of Nations"
defines & explains capitalism
changes Europe's & America's economic practices Wants vs. Needs goods & services not essential for survival goods & services necessary for survival Capitalism & Ideologies What Ideologies Best Support Capitalism as a System? Democracy values individual freedom
protection of rights & property by the government
limited government
Capitalism flurishes as the US expands Industrial Revolution use of machines & technology to mass produce consumer goods
US industrializes 1830's-early 1900's
Capitalism makes industrialization possible
Capitalist beliefs become American beliefs
Government supports capitalism & industrialization
Society celebrates & rewards capitalism Horatio Alger wrote "rags to riches" stories
celebrated the idea that hard work & dedication led to success, that anyone could make it, become rich & powerful
books become very popular “So, here's my question: after fleecing the American public and destroying the American dream for most working people, how is it that, instead of being drawn and quartered and hung at dawn at the city gates, the rich got a big wet kiss from Congress in the form of a record tax break, and no one says a word? How can that be? I think it's because we're still addicted to the Horatio Alger fantasy drug. Despite all the damage and all the evidence to the contrary, the average American still wants to hang on to this belief that maybe, just maybe, he or she (mostly he) just might make it big after all.” - Michael Moore Positives & Negatives of Capitalism Lets discuss, shall we Socialism a political & economic system where the government controls the factors of production attempt to correct the problems created by
capitalism during the Industrial Revolution redistribute wealth and improve living & working conditions Create a society where success benefits all not just the few Origins of Socialism Industrialization in Europe & the US led to many problems
Unequal distribution of wealth
Poor living & working conditions
Government under the control of business owners & monopolies
Child labor, pollution, corruption, etc. Socialist Thinkers Socialist Thinkers & Moral Philosophy Jeremy Bentham: Utilitarianism believed that society's actions should benefit the greater good, do what is best for everyone, what produces the most happiness John Stuart Mill supported & added to Bentham's ideas believed in universal sufferage (voting)
wanted free education for all children Karl Marx "The worker becomes all the poorer the more wealth he produces, the more his production increases in power and range. The worker becomes an ever cheaper commodity the more commodities he creates. With the increasing value of the world of things proceeds in direct proportion to the devaluation of the world of men. Labour produces not only commodities; it produces itself and the worker as a commodity -- and does so in the proportion in which it produces commodities generally." born 1818, Germany
exposed to radical ideas & becomes a journalist
moves to Paris, becomes Communist, meets Freiderich Engles
expelled from Paris due to his radical writings, joins Engles
in England
Studies history, develops theory about the collapse of capitalism
Joins the Communist League, asked to write a pamphlet explaining their beliefs Communist Manifesto (1848)
"The history of all hitherto existing society is the history of class struggles.
Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes." According to Marx history was a struggle between the "haves" and the "have-nots"
Haves: business owners, bourgeoisie
Have-nots: working class, proletariat
Capitalism was doomed to fail, inherently unequal and oppressive
Proletariat would revolt against the bourgeoisie, take control of the factors of production
Create a classless society without the need for owners or for government VS Impact: 1848 Revolutions break out in Europe, Marx's ideas spread quickly, gians support amongst the working class in Europe Capitalism: doomed to fail Revolution of the Proletariat: workers control the
factors of production Socialsim: workers assume control of the government Pure Communist State: society becomes classless, government "withers away", all people become equal in society Das Kapital (1867) Labor Theory the value of a commodity can be objectively measured by the average number of labor hours required to produce that commodity Communism a classless society where the workers control all the factors of production, government ceases to exist and all people share equally in the wealth of society no private property
no government
no religion
no nations/states
eliminate any and all barriers that divides people and creates groups Labor Commodity
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